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SPORTIQUE MOTORS, LTD. v. JAGUAR CARS

March 20, 2002

SPORTIQUE MOTORS, LTD., PLAINTIFF(S),
V.
JAGUAR CARS, INC. AND PORSCHE CARS NORTH AMERICA, INC., DEFENDANT(S).



The opinion of the court was delivered by: Platt, District Judge.

MEMORANDUM AND ORDER

Before this Court are motions for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure by Defendant Jaguar Cars, Inc. ("Jaguar") and Plaintiff Sportique Motors, Ltd. ("Sportique").

From January 1989 to May 1999, Sportique was a franchised motor vehicle dealer for Jaguar. Pursuant to the franchise relationship, Sportique performed warranty service for Jaguar's customers and Jaguar reimbursed Sportique for the same. In May 1999, upon Sportique's sale of its assets to a third party, Sportique and Jaguar terminated their relationship and executed a mutual release, as the 1989 dealer agreement so required. In this action, commenced in 2000, Sportique contends that Jaguar's warranty reimbursements from 1996 to 1999 (the "Relevant Period")*fn1 were deficient and in violation of Section 465 of the Vehicle and Traffic Law ("Section 465")*fn2. Jaguar contends that Sportique is barred from bringing this action because the parties signed a mutual release in 1999. In reply, Sportique contends that the release is invalid because it violates Section 463(2)(1) of the Vehicle and Traffic Law ("Section 463(2)(1)")*fn3.

For the reasons discussed herein, this Court has concluded that, in 1999, Sportique signed a valid and binding release with Jaguar and is therefore barred from bringing the instant lawsuit.*fn4

VEHICLE AND TRAFFIC LAW

Section 465 reads, in pertinent part: Every franchisor shall properly fulfill any warranty agreement and/or franchisor's service contract and shall compensate each of its franchised motor vehicle dealers for warranty parts and labor in amounts which reflect fair and reasonable compensation for such work. . . . [F]air and reasonable compensation shall not be less than the price and rate charged by the franchised motor vehicle dealers in the community or marketing area for like services to non-warranty and/or non-service contract customers, provided such price and rate are reasonable.

N.Y.VEH. & TRAF.LAw § 465(1) (McKinney 1996).

Section 463(2)(1) provides that it is unlawful for any franchisor:

To require a franchised motor vehicle dealer to assent to a release, assignment, novation, waiver or estoppel which would relieve any person from liability imposed under this article, provided that this paragraph shall not be construed to prevent a franchised motor vehicle dealer from entering into a valid release or settlement agreement with a franchisor.

N.Y.VEH. & TRAF.LAW § 463(2)(1) (McKinney 1996).

BACKGROUND

I. Dealer Agreement of January 1, 1989

Pursuant to a Dealer Agreement dated January 1, 1989 (the "Dealer Agreement"), Sportique was a non-exclusive authorized dealer engaged in the business of selling and servicing Jaguar automobiles.

Eliot Brown, President and owner of Sportique, executed the Dealer Agreement for Sportique. At some point, Eliot Brown's son, Michael Brown, became a ten percent (10%) owner of Sportique. (Dep. of E. Brown at 8.)

a. Warranty Provision

Pursuant to the Dealer Agreement, Sportique provided parts and labor to customers whose vehicles were repaired under warranty by Jaguar. (Pl.'s 56.1 Counter-Stmt. ¶ 27.) Sportique would then submit warranty claims to Jaguar to be compensated. (Pl.'s 56.1 Counter-Stmt. ¶¶ 30-45.)

b. Mutual Release and Termination Agreement Provision

Section 17.4 of the Dealer Agreement provided, in pertinent part, that:

Upon termination of this Agreement by either party, upon its expiration without renewal, or upon the Company's approval of any purchaser(s) of Dealer or of all or substantially all of the assets used in Dealer's Jaguar Operations . . . the Company and Dealer shall execute and deliver to each other the form of Mutual Release and Termination Agreement then in use by the Company. Said Mutual Release and Termination Agreement (i) shall unconditionally terminate the Dealer Agreement then in force between the Company and Dealer and (ii) shall provide for the mutual release by each of the parties hereto of any and all claims either may have against the other, excepting only such claims as are then known to and pending between the Company and Dealer and which are expressly set forth and specified in said Mutual Release and Termination Agreement.

(Dealer Agreement ¶ 17.4.)

Requiring selling dealers to sign the Mutual Release and Termination Agreement avoids there being two Jaguar dealer agreements in effect and contention as to who owns ...


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